China's carbon market has hit a significant milestone, with carbon permits rising to an all-time high of $14.62 (103.49 yuan) per tonne. This 35% price increase, observed since the start of 2024, is largely driven by tighter regulations and industries preparing for an end-of-year compliance deadline.
Expansive landscape view of the Greater Khingan Range Forest in China, one of the most significant forested areas, covering over 200,000 square kilometers. AI generated picture.
The country’s mandatory Emission Trading System (ETS), launched in 2021, covers eight key sectors, including power generation, steel, and petrochemicals. Together, these industries account for 75% of China’s carbon emissions. Power utilities, which face immediate pressure to secure enough carbon credits to cover their 2023 emissions, are particularly affected by the price surge.
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China’s ETS has grown rapidly to become the largest carbon trading platform in the world, covering 5.1 billion tonnes of CO2 annually. The government’s push for stricter emissions regulations has fueled demand for carbon permits, as companies exceeding their emissions allowances must buy additional credits on the market.
In a move to extend its environmental efforts, China plans to broaden the scope of the ETS in 2025 to include high-polluting sectors like steel, cement, and aluminum. Stricter caps on fossil-fuel power generators are also expected to further pressure industries to reduce emissions or invest in cleaner technologies.
These regulatory shifts are aligned with China’s ambitious climate targets, aiming to peak carbon emissions by 2030 and reach carbon neutrality by 2060. As the market matures, its impact on decarbonisation will become more apparent, offering valuable insights for other nations looking to enhance their own carbon markets.
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DGB Group is dedicated to advancing global reforestation and tackling the harmful impacts of deforestation on both the planet and its biodiversity. As carbon prices continue to rise, businesses that invest early in emission compensation strategies will see long-term benefits. We invite you to join our mission to protect the Earth through innovative nature-based carbon projects and strategic partnerships. Our high-quality carbon units not only help companies meet their net-zero goals but also drive significant environmental and community improvements. Preventing deforestation and promoting biodiversity is central to our work as we strive for a sustainable and thriving future for all.
